As you age, your spending habits may change. Adults go through significant life events such as purchasing a home, getting married, or having children. These events may affect the rate at which you save and how you allocate the money you are spending. Every generation spends money differently, as various things define each of them. Different generations have varying values and preferences and do things differently. For example, millennials are less comfortable with debts than other generations; they also pay digitally and mostly shop online. This generation can actively manage their finances. Meanwhile, Generation Xers spend the most money compared to millennials and Baby Boomers. This article will shed light on the Baby Boomer spending habits.
What Are the Baby Boomer Spending Habits?
While retailers watch Generation Z as they become full-fledged consumers, they should not neglect the Baby Boomer generation. Baby Boomers make up just below the same percentage of the United States population as millennials. Yet, there are more of them than Generation X. Businesses shouldn’t ignore the Baby Boomer generation at any cost.
Baby Boomers are the wealthiest generation and hold 70 percent of the disposable income in the United States. Boomers spend $548 billion every year and more than all other generations across all categories. Baby Boomers account for 71.6 million people in the U.S.; therefore, they provide an excellent opportunity for retailers. Most Baby Boomers who are already retired have a disposable income for spending on themselves, their children, vacations, and education.
An Overview of Baby Boomer Spending Habits
How are Baby Boomers spending their money? Here’s an overview of the main ways this generation is using their dollars. You’ll also find some ideas on how to best approach this age group.
Exploring the World
One big area that Baby Boomers are spending their extra money is traveling. This generation spends more than $120 billion per year on leisure travel. The age group spends this money visiting family members, traveling to dream destinations, cruising, and doing other things that make them happy. There is an increase in once-in-a-lifetime international trips among Baby Boomers visiting warm destinations such as Florida, Las Vegas, the Caribbean, etc.
Another central area where Baby Boomers are spending money is healthcare. Baby Boomers are focused on keeping an active lifestyle and remaining young-spirited. To achieve this goal, the demand for pharmacy prescriptions has gone up. The generation is buying more vitamins and other health-related products, increasing over time. Baby Boomers are already outspending millennials and Generation Xers on medication and healthcare per year.
Baby Boomers find small-box retailers more appealing than large supercenters. This is because small-box retailers are easy to navigate, convenient, and popular. The stores also have better customer service, which Boomers find appealing.
Baby Boomers are also spending a lot of money on pets, helping fuel the increased growth in the pet industry. In 2014 alone, Baby Boomers spent approximately $30 billion on just pets. This accounts for 45% of the total pet spending in the U.S.
Analysts state that Boomers are spending more on pets yearly than the younger generations, a trend that will likely continue. Since some are already retired, Baby Boomers have a lot of time on their hands. They want a full house after their children have moved out. Therefore, spending on pets will continue to be a considerable part of their lifestyle.
Grocery chains and retail shops should work on expanding their pet offerings, as they will benefit more from the high boomer spending.
Baby Boomers spend more on renovations and home repairs than any other generation. Retailers offering home improvement and repair services such as Home Depot are now huge winners with Boomers. This generation also spends a lot of time watching their favorite T.V. programs at home, therefore putting more money on cable or satellite television. Only a smaller percentage of Baby Boomers would agree to switch from cable and satellite television to the digital streaming platforms as millennials have.
Around 60% of Baby Boomers read weekly blogs, and 70% watch online videos. This shows that Boomers are engaging with online content, and therefore merchants that prioritize content marketing can create a great relationship with this age group. Producing real estate content, funny videos, following trending topics or other exciting topics will keep this generation glued to their screens.
What Is Hurting Baby Boomers’ Retirement?
Baby Boomers’ income has not changed a lot, although the portions spent on some categories of goods and services have grown. Baby Boomers spend a lot on healthcare and education. Adult children are also taking a toll on their Baby Boomer parents, with most offspring between 18 and 36 getting support from their parents on living expenses, medical bills, etc. Mortgage rates have also gone up, and Boomer parents are also helping their adult children clear these debts.
Baby Boomers are not spending a lot on food purchases and clothing expenses. Although it’s believed that the savings rate is stagnant or declining, retirement accounts are playing a huge role for this generation. Nonetheless, retirement savings are not close to the 10% that the government often recommends as the income share that people should dedicate to savings.
Baby Boomers care more about customer service. Therefore, if you target them in retail eCommerce, you should keep your website engaging, user-friendly, and exciting. Baby Boomers are more likely to buy if they have coupons and loyalty discounts. Since they have more purchasing power than all other generations, they present an excellent opportunity for eCommerce businesses. This generation is worth the extra effort you may take to deliver what they need.
Although millennials continue to dominate headlines, it’s Boomers who dominate consumer spending in the United States. Boomers are responsible for more spending growth in the last ten years than all other generations. At Consumer Protection Group, we understand the needs of every generation. As a Baby Boomer, if you are in debt, we are here to help you. We can walk together through your journey to financial freedom. Contact us today.